Arable land in Nepal shrunk 16.6 percent between 2011 and 2021, as urbanisation expanded and the rural population declined, according to the latest report from the Nepal Statistics Office (NSO).

The urban population grew at an average annual rate of 1.84 percent during the decade, while the peri-urban population rose by 1.47 percent. In contrast, the rural population decreased by an average of 0.36 percent annually, says the analytical report titled “Urbanization and Development in Nepal” which is based on the National Population and Housing Census 2021.

The report shows that the total area of arable land declined by 358,995 hectares—from 2.16 million hectares in 2011 to 1.8 million hectares in 2021.

Gandaki Sees Sharpest Decline

Gandaki Province recorded the sharpest decline in arable land—22.9 percent—shrinking from 163,927 hectares to 126,429 hectares. Other provinces with significant declines include Koshi, Bagmati, Karnali, Lumbini, and Sudurpaschim. Madhesh Province saw the smallest reduction at 12.9 percent.

(Agriculture land use (hectare) and inter-census change, 2011-2021)

Madhesh still holds the largest share of Nepal’s arable land at 24.2 percent, followed by Koshi (22.1%), Lumbini (19.3%), and Bagmati (12.9%). The share is much smaller in Sudurpaschim (9.1%), Gandaki (7%), and Karnali (5.4%), indicating more limited scope for large-scale urban expansion in those regions, the report says.

Regionally, the Terai lost the most arable land—157,944 hectares—followed by 154,125 hectares in the hills and 46,926 hectares in the mountains. The Kathmandu and Pokhara valleys were likely major contributors to the hill-region decline, the report notes.

Of the total arable land, 53.8 percent is now located in municipal areas: 48.3 percent in municipalities, 3.6 percent in sub-metropolitan cities, and 2 percent in metropolitan cities. Rural municipalities account for the remaining 46.2 percent.

The report highlights that the limited arable land in metropolitan and sub-metropolitan cities signals constrained potential for future urban growth. Instead, urban expansion is more likely to occur in municipalities bordering large cities and in strategically located municipalities in the Inner Terai, Terai, and Hill regions.

The NSO report defines arable land as “the land under temporary crops and is a dominant composition of agricultural land with urbanization usually taking place on this land.” 

Urbanisation vs Urban Character

About 66 percent of Nepal’s population now lives in municipalities, up from 17.1 percent in 2011. But this increase is largely the result of administrative reclassification, not actual urban development, says Dhundiraj Lamichhane, Deputy Chief Statistician at the NSO.

(Urbanization level of Nepal compared with other SAARC countries)

Nepal’s 2017 restructuring replaced 3,915 Village Development Committees (VDCs) and 58 municipalities with 753 local units: 460 rural municipalities and 293 municipalities, including six metropolitan and 11 sub-metropolitan cities. As a result, the population in municipalities jumped to 66.2 percent in 2021, while the rural share fell to 33.8 percent.

“However, most municipalities still display rural characteristics,” Lamichhane noted. “This reclassification doesn't reflect a transformation in people’s lives or the economy.”

One of the key goals of the report was to help redefine the term ‘urban’ in the Nepali context by aligning it with global practices and key physical, social, and economic indicators, Lamichhane, who was responsible for quality assurance and data processing/review the report, added.

DEGURBA: A More Accurate Measure

To refine the understanding of urbanisation, the NSO used the “Degree of Urbanisation” (DEGURBA) methodology, a UN-approved classification system that uses population density, contiguity, and built-up areas to define urban, peri-urban, and rural zones.

Peri-urban are those areas which contain mixed characteristics of both urban and rural areas.

(Population and growth rate according to administrative boundaries, 2001-2021)

Based on the DEGURBA analysis, only 27 percent of Nepal’s population lives in areas that meet the criteria for being urban, while 40 percent live in peri-urban areas, according to the report.

“Of the total 753 local levels, 487 (64.7%) have no population living in urban areas, and these local levels contain 62.6 percent of the total population. The 139 wards within Gaunpalikas [rural municipalities] have an urban categorization and 17 Gaunpalikas, with a level of urbanization above 40 percent, containing 2.3 percent of the urban population,” the report adds.

 

(Population by degree of urbanization, 2021)

The DEGURBA-based analysis categorised each ward—the lowest administrative unit—into urban, peri-urban, and rural. Many municipalities contain rural wards, and some rural municipalities contain urban wards, reflecting a complex urbanisation landscape.

“This granular approach reveals the spatial diversity within local units,” Lamichhane said. “It offers a more accurate lens to assess and plan for urbanisation in Nepal.”